The term "full-time equivalent" refers to the full-time equivalent of a company's part-time employees. It is often used to calculate the size of an company based on hours worked by all W-2 employees.
The number of full-time equivalent employees (FTEs) is equal to the company's full-time employees plus full-time equivalent part-time employees rounded to the lowest whole number.
To calculate the number of FTEs, the company should do the following:
First, the company should determine the number of full-time employees (i.e. those working 40 or more hours per week).
Next, the company should determine the full-time equivalent of its part-time employees (i.e. those working less than 40 hours per week) by:
- adding up all hours for which wages were paid to part-time employees* and
- divide that number by 2,080
The number of FTEs is equal to the company's full-time employees* plus full-time equivalent part-time employees* rounded to the lowest whole number.
